ContractsProf Blog

Photog sues Diaz for breach over nude photos

Photographer John Rutter, awaiting trial on charges of forgery, perjury and attempted grand theft over disputed nude photographs of actress Cameron Diaz, has filed a breach of contract action against the star for $10 million.

Rutter photographed Diaz before stardom hit in films The Mask, There’s Something About Mary, and Charlie’s Angels. The photos, together with what is described as an "R-rated" "softcore" video, appear to be genuine, and Rutter has a signed model release. Diaz and the prosecutor’s office, however, claim that the release is forged. Diaz says the understanding was that the photos would never be published.

Rutter offered the photos to Diaz for $3.3 million; Hustler magazine has reportedly offered $3.5 million for them.

Today in history—December 17

1737: Italian violin maker Antonio Stradivari proves the economic insight the price reflects scarcity by dying.  He made only about 1,200 violins during his lifetime—a collection of four Stradivarius instruments was recently appraised at $50 million.

1776: North Carolina ratifies its constitution.

1787: New Jersey becomes the third state to ratify the U.S. Constitution.

1865: The U.S. Secretary of State announces that the Thirteenth Amendment to the Constitution, abolishing slavery, has been ratified by the states.

1888: Robert Moses, the city planner who more than anyone else shaped the modern New York City, is born in New Haven, Connecticut.   His motto?  “If the end does not justify the means, what does?”

1890: Edwin Howard Armstrong is born in New York City.  He will subsequently invent FM radio, which permits NPR to compete against Rush Limbaugh.

1946: Steven Allan Spielberg, perhaps the most commercially successful film director of all time and co-founder of Dreamworks Studios, is born in Cincinnati, Ohio.

PeopleSoft sued over Cleveland State contract

The state of Ohio is suing software vendor PeopleSoft for $130 million in compensatory and punitive damages, over a contract to provide the administrative software systems at Cleveland State University.

The suit claims that the PeopleSoft system did not work well and had trouble with student records and financial aid support.  In addition, the state claims that the vendor misrepresented the system's capabilities, and that many of its touted features were mere "vaporware."

Today in history—December 18

1619: Prince Rupert (left), the "foreign prince" of Paradine v. Jane, is born at Prague

1728: After 78 years in existence, Shearith Israel, the first Jewish congregation in North America, purchases a lot on Mill Street in lower Manhattan, on which it will build it own building, the first synagogue in New York.

1807: Poet John Greenleaf Whittier, who will later give his name to California’s Whittier Law School, is born at Haverhill, Massachusetts.

1874: Lawyer William Lyon Mackenzie King, who had more time in office and probably more college degrees (5) than any prime minister in Commonwealth history, is born at Berlin (now Kitchener), Ontario.

1895: The National Anti-Saloon League (later known as the Anti-Saloon League of America) is founded in Washington, D.C.

1900: The Prix Guzman, which offers 100,000 francs to anyone who successfully communicates with other planets, is created.  It has not yet been claimed.

1953: The Federal Communications Commission approves RCA’s technology for color television, which allows the color signals to be picked up on existing black-and-white sets.

1965: The "Eighth Wonder of the World," the $35 million Houston Astrodome (left), opens with a concert by Judy Garland and the Supremes.  The Houston Colt 45s baseball team will be renamed the Astros, although they will still not be very good.

1965: The great coal mines of the Limburg region of the Netherlands, in continuous operation since the middle ages, are closed by the Dutch government.

1969: The U.S. Air Force announces that its UFO investigations have turned up no evidence of of extraterrestrial spacecraft.  That’s what they’re hoping you’ll believe, anyway.

1975: John Paul Stevens is commissioned as a Justice of the U.S. Supreme Court.

Contract suits plague Big Dig

Boston’s Big Dig—the most expensive transportation project in American history—is proving to be a boon to lawyers as well as construction companies.  The $14.6 billion "Central Artery and Third Harbor Tunnel" project, which buries Interstate 93 beneath downtown Boston and connects the Massachusetts Turnpike to Logan Airport, has been plagued by cost overruns, leaks and other problems.

So far, the state’s Turnpike Authority has filed 11 lawsuits against Big Dig contractors and designers for things like misjudging the length of a tunnel and forgetting to leave room for a gas main.  Ten of the suits are relatively small potatoes, totaling about $13.9 million, according to a review by the Associated Press.

The big one, though, is a breach of contract action against the project manager, Bechtel/Parsons Brinckerhoff, which earned $140 million in profits and another $6 million in fees on the contract, about one percent of the total price. The authority claims that Bechtel low-balled the project price when it knew, or should have known, that it would actually cost billions more than its estimate.

Today in history—December 16

1515: Alfonso de Albuquerque, the chief architect of Portuguese commercial domination of the East Indies, dies at Goa.

1653: Oliver Cromwell becomes Lord Protector of England.  Some good advice when we get too sure of our own views:  "I beseech you, in the bowels of Christ, think it possible you may be mistaken!"

1689: Parliament adopts the Bill of Rights following the deposition of James II.

1773: Angry over taxes on tea, a group of citizens in Boston dress themselves up as Indians and toss tea into Boston harbor, in an incident that will come to be known as the Boston Tea Party.  They will, according to legend, subsequently be immortalized in a baseball team that will move first to Milwaukee and then to Atlanta (the Braves) and a football team that will later move to Washington, D.C. (the Redskins).

1863: Philosopher George Santayana is born.  Those who remember his sayings are condemned to repeat them.

1943: Steven Bochco, the creator of some of the most popular law related dramas of all time—including Hill Street Blues, LA Law, and NYPD Blue—is born in New York City.

1963: Benjamin Bratt, who will play Det. Reynaldo Curtis on Law and Order, is born in San Francisco.

1966: A huge best-seller, the Little Red Book of Chairman Mao Zedong is published in Beijing.  He calls the United States a "bean curd tiger."

1980: The inventor of American franchised fast food, Colonel Harland Sanders (left), dies.  The first Kentucky Fried Chicken store opened in Salt Lake City in 1952, when Sanders was 62 years old.  Ten years later, there were 1,000.

Today is National Day in Bahrain, Victory Day in Bangladesh, Independence Day in Kazakhstan, and Constitution Day in Nepal

Case selection and legal change

The role that courts and cases play in legal change is, of course, widely recognized in the common law world.  What judges do has been much studied.  But judges can do nothing until lawyers and litigants bring them a case.  How do the decisions of the litigants themselves drive changes in legal remedies?

A new paper by Vincy Fon, Francesco Parisi, and Ben DePoorter, Litigation, Judicial Path-Dependence, and Legal Change, forthcoming in the European Journal of Law and Economics, explores the role of case selection in the development of legal remedies.  The abstract:

In this paper we consider the role that litigation and case selection play in the process of legal change. We examine the effect of judicial path dependence on the consolidation of liability rules and legal remedies, paying special attention to litigation between parties with different stakes. In the presence of asymmetric stakes, judicial path dependence may lead to consolidation or contraction of legal rules. We study the consequence of private litigation decisions on the contraction or consolidation of legal rules under various litigation and judicial environments. We also consider the relevance of the degree of asymmetry in the litigation stakes, the existence and nature of positive litigation costs, and the weight of past precedents on the ongoing process of legal evolution.

What's new at the Wharton School

Today's issue of the Knowledge@Wharton newsletter has several interesting stories, including:  A new study ranking colleges (though not law schools) based on revealed student preferences. . . .  Thoughts on China’s purchase of IBM’s personal computer division. . . .  The growth of offshore outsourcing. . . . And a "Report from the Trenches" on women in business.

The evolution of boilerplate: Market v. regulation

Ordinary observation suggests that once some clause becomes part of the usual "boilerplate" in an industry, it tends to persist, even in the face of complaints that it is inefficient.  Over time, however, all such clauses change.  (Left: Original boiler plate from the destroyer U.S.S. Mullenix.)

How and why this happens is a topic that has not been widely studied, but Robert B. Ahdieh, in a new paper, Between Mandate and Market: Contract Transition in the Shadow of the International Order, explores a particularly striking example of a recent change: the elimination of the unanimous consent requirement for restructuring in sovereign debt instruments.  Ahdieh explores both the role of market forces and the possibility that regulation can spur such changes. For the abstract, click on the link below.

ABSTRACT:

Boilerplate in sovereign debt contracts issued in the United States has long dictated the unanimous consent of bondholders to any debt restructuring. This requirement persisted for decades, notwithstanding wide consensus that such unanimous action provisions increased transaction costs, produced inefficient delays in debt restructuring, enhanced the moral hazards of the sovereign debt market, and otherwise encouraged collective action failures. Yet the sovereign debt markets has recently made an about-face, replacing the unanimity requirement for debt restructuring with a less demanding provision for collective, or majority, action by creditors. Completed over the course of just a few months in 2003, this unexpected and dramatic shift offers a natural experiment of sorts: Why might contract boilerplate not respond to apparent efficiency demands for extended periods? What might cause it to respond eventually? In particular, what role might state action have in the evolution of boilerplate contract terms and in contract transition generally? In the realm of international finance, these inquiries demand urgent analysis: Can the market be expected to facilitate efficient transition in contracts with significant boilerplate elements, or is regulatory mandate essential to such change? Challenging a dichotomous choice between market and mandate, this Article proffers a third way toward efficient contract transition. While the market may not always produce efficient transition, ordinary public regulation may be no better. Instead, this Article identifies state action grounded in noncoercive regulatory cues as the mechanism of efficient transition in standardized contract terms. In the face of growing reliance on boilerplate contract terms and standard-form contracts, public intervention in the form of regulatory cues may, paradoxically, help to facilitate meaningful choice in contract design, and hence a true freedom of contract. The role of regulatory cues in sovereign debt contracts, moreover, may suggest a potential role in international regulation generally, given the limits of hard power within a community of sovereign states.

Today in history—December 15

1790: U.S. Supreme Court Justice James Wilson (left), elected the first professor of law at the University of Pennsylvania, delivers the school's first law lecture.  Wilson will only teach for one semester; it will not be until 1852 that the law school will be permanently established.

1791: The first step in organizing the William and Mary Bill of Rights Law Journal is taken when the first ten amendments to the United States constitution come into effect when Virginia becomes the final state necessary ratify them.

1792: The first U.S. life insurance policy is issued in Philadelphia.  The first lawsuit against an insurance company probably followed fairly soon thereafter.

1793: Henry Charles Carey, the economist who will become one of the foremost proponents of trade protectionism, is born in Philadelphia.

1832: Alexandre-Gustave Eiffel, the French engineer who will invent a public building that actually pays for itself and then makes a profit, is born at Dijon.  (Click on the picture to see the lights twinkle.)

1853: Jean Kessler is born in the Netherlands.  He will go on to co-found a small oil exploration company called Royal Dutch; under fierce competition from the American Standard Oil Company, it will merge in 1907 with the British Shell Transport and Trading Company, to become Royal Dutch/Shell.

1892: Oilman Jean Paul Getty is born in Minneapolis, Minnesota.

1891: Canadian physical education instructor James Naismith, under orders from his boss to come up with "an indoor game that would provide an ‘athletic distraction’ for a rowdy class through the brutal New England winter," invents basketball at Springfield College, Massachusetts.

1922: Alan "Moondog" Freed, the disk jockey who would invent the term "rock and roll" but whose career would be destroyed by the music-business "payola" scandal in 1962, is born in Johnstown, Pennsylvania.

1925: The third edition of Madison Square Garden opens with a hockey game; the Montreal Canadiens defeat the New York Americans 3-1.

1939: The most commercially successful film of all time, Gone With the Wind, has its grand opening in Atlanta.

1964: Canada replaces the old Red Ensign flag, as the House of Commons adopts the the Maple Leaf flag, or l'Unifolié.

1966: Entertainment giant Walt Disney, who revolutionized both animated films and amusement parks, dies.  Rumors that he was cryogenically frozen are urban legends.  At least, that's what they want you to believe.

1974: Arbitrator Peter Seitz rules that the Oakland Athletics breached the contract of pitcher Jim "Catfish" Hunter (left) by failing to buy a required insurance policy. He releases Hunter from his contract, allowing him to become a free agent and subsequently to sign the then-largest contract in baseball history, $3.75 million from the New York Yankees.

1994: The first successful browser for the World Wide Web, Netscape Navigator 1.0, is released.

FTC hearing explores consumer file-sharing issues

The Federal Trade Commission is holding a public session today and tomorrow (December 15-16) to deal with consumer protection and competition issues surrounding peer-to-peer file sharing. The agenda for the program, which is free and held at the FTC’s Conference Center in Washington, D.C., includes:

The uses of P2P file-sharing technology;
The role of P2P file-sharing technology in the economy;
Identification and disclosure of P2P file-sharing software program risks;
Technological solutions to protect consumers from risks associated with P2P file-sharing software programs;
P2P file-sharing and music distribution; and
P2P file-sharing and its impact on copyright holders.

Those who cannot attend can file comments. Details on the hearing and the comment process are on the Commission’s web site.

Companies protest award of $1 billion Treasury contract

A $1 billion government contract to provide telecommunications services to the U.S. Treasury Department is being challenged.  Three big players in the field, Qwest, Northrop Grumman, and Broadwing, are protesting the Treasury’s award to AT&T.

The contract at issue is for the "Treasury Communications Enterprise" (TCE), which provides service and tech support at 850 locations. According to Government Executive magazine's web site, knowledgeable observers suggest there may be problems with the procurement:

Treasury awarded TCE after receiving only one round of offers from the bidders, which included A&T rival Sprint Co. The department had reserved the right to seek only one round, but industry observers have noted that it's rare not to ask for multiple offers on a contract as technically complex and lucrative as TCE. A second round of offers might give the government a better range or service prices, they said.

DVD group sues home theater juke box manufacturer

The DVD Copy Control Association has sued Kaleidescape, Inc. for violating the licensing terms that prevent copying of DVDs.  Kaleidescape, a privately held company in Mountain View, California, makes high-end home entertainment systems (left, starting at only $27,000) that can store hundreds of movie discs onto a hard drive.  The suit was filed in Santa Clara (Calif.) Superior Court.

At issue, according to the DVD CCA, is Kaleidescape's license, which allegedly requires that its architecture prevent the creation of persistent digital copies, which can theoretically be subsequently copied by others.  Kaleidescape claims that its copies cannot, in fact, be copied onto personal computers but can only be accessed from within the home or office that contains the system.

Cyberspace Committee schedules winter meeting

The folks at the ABA’s Cyberspace Law Committee will be holding their Winter Working Meeting January 28-29 in Palo Alto.  The conference hotel is the Sheraton Palo Alto (left).

The Committee has a host of projects going on relating to nearly every aspect of E-commerce, and is encouraging Section Members (and others interested in these issues) to get involved.  They're a friendly and collegial group and are doing some excellent work.  Click on the link below for the invitation.

Register now to attend the Cyberspace Law Committee Winter Working Meeting, January 28-29, 2005, in Palo Alto, CA.  Hotel reservations must be made by January 3 to take advantage of the ABA group rate. Dinner reservations must be sent to the ABA no later than January 14. New this year: on-line registration. Keep reading for the link to register on-line.

The Winter Working Meeting offers a wonderful opportunity to network with Committee colleagues and industry leaders as we work towards the common goal of developing sound strategies and policies relating to Cyberspace Law. The Winter Working Meeting is a must-attend experience. We especially encourage everyone who has joined the Cyberspace Law Committee this year to attend the Winter Working Meeting.

For a current list of Committee projects and leadership, please visit the Committee web page.

You should feel free to contact project leaders in advance of the Winter Working Meeting with any questions you may have.  We will be circulating an agenda for the Winter Working Meeting shortly. If you have not already done so, I also encourage you to register for LawHub, a collaboration space for the Committee projects.

Other links:

The Chair's Welcome Letter.

Hotel Information

On-Line Registration (members only)

Registration Form (members and others)

ABA Travel

Directions to Hotel

NHL owners stick to salary cap demand

National Hockey League owners, locked in a labor dispute with the players’ union, are reportedly going to reject the union’s latest offer of a 24 percent decrease in player salaries.

The owners have been demanding a hard salary cap—linking total player salaries to a percentage of league revenues—like that in some other sports.  A league spokesman said that the players’ proposal would solve the league’s short-term financial difficulties, but doesn’t create a long-term solution.  The lockout, which has been in effect since September, threatens to cause the loss of the entire season.

Grad students protest sick leave policy at Iowa

Graduate students at the University of Iowa picketed yesterday, protesting policies by the school’s College of Liberal Arts and Sciences that require them to add an extra hour of work for each hour of sick time they take.

The grad students’ union picketed outside Schaeffer Hall (left), as part of its negotiations on a new two-year contract with the university.  A spokesman for the Iowa City school said that grad students have "overarching responsibilities" during the semester—such as covering all the material in a course—that require such extra work.

Today in history—December 14

1503: The French seer Michel de Nostredame, or Nostradamus, is born, too early, unfortunately, to make a killing in the stock market.

1656: The first successful artificial pearls are produced.  A French coroner named Jacquin uses luminous crystals removed from fish scales inside hand-blown glass beads filled with wax.

1793: Kentucky begins the first state highway in the U.S., a road from Frankfort to Cincinnati.

1799: George Washington, the first non-lawyer to be elected President of the United States, dies at Mount Vernon.

1819: Alabama is admitted to the Union as the 22nd state.

1829: John Mercer Langston (left), who will become the first black lawyer in Ohio and perhaps the first African-American to be elected to public office in the United States—as Town Clerk of Brownhelm, Ohio—is born in Louisa County, Virginia.  He will later found what is now the law school at Howard University.  Oklahoma’s Langston University is named for him.

1889: The American Academy of Political & Social Science is organized at Philadelphia.

1907: William Thomson, Lord Kelvin of Largs, dies in Ayrshire, Scotland.  His fame came from his scientific experiments, but his wealth came from his participation in the transatlantic cable project, where his patented galvanometer made long-distance transmission possible

1917: Universal Film AG (known as UFA), is formed in Germany. As a film studio it will produce such classics as The Cabinet of Dr. Caligari and Fritz Lang's Metropolis.

1960: The Organization for Economic Cooperation & Development (OECD) is formed.

1969: A great many investors lose money when the musical version of Fellini’s La Strada closes in one night on Broadway.  What on earth were these people thinking? "Hey, I’ve got it!  Let’s do a Broadway musical about a brutal circus strongman who buys a half-witted woman for a slave, savagely mistreats her, murders the only friend she has, and then cheerfully abandons her to die alone."

1975: Arthur Treacher (left), who gave up the study of law to become the perfect Hollywood manservant in films like Thank You, Jeeves and later introduced fish and chips shops to the United States, dies in Manhasset, New York.

1988: CBS wins the auction for the rights to broadcast major league baseball for $1.1 billion.

1997: The British solicitor and philosopher Owen Barfield, author of works on language and consciousness and a major influence on such writers as J.R.R. Tolkien and C.S. Lewis, dies in East Sussex, England.

Why treat like cases alike?

We teach our students that like cases should be treated alike.  That, after all, is the essence of common law reasoning.  But do you ever wonder why they should?  No?   Then you may be interested in a new paper, Should Like Cases be Treated Alike?, by legal philosopher Andrei Marmor. Click on the link below for the abstract.

ABSTRACT:

Are there any good reasons to treat previous judicial decisions as legally binding in similar cases, just because they aresimilar, even if the underlying reasons of the previous decisions determined the result? I argue in this short essay that this is the relevant question about treating like cases alike, and I offer two possible principles that may ground an affirmative answer: the principle that justice should be seen to be done, and the principle of protected expectations. Both answers are criticized as over inclusive and only partly defensible. Finally, the essay concludes with a suggestion that there are two modes of analogical reasoning in adjudication, and that one of them may rationalize a certain type of cases in which like cases should be treated alike.

Miss Rivers, you’re on in five . . . .

Comedian Joan Rivers apparently has time management problems.  Her performance contract contains an unusual express provision that the stage manager personally give her a thirty-minute, fifteen-minute, and five-minute warning before she is to go on stage.  What, a clock won’t do?

Contract, slavery, and wage slaves

The "almost forgotten contractarian tradition" underlying some theories of slavery is explored in a new article by economist David Ellerman, called Rethinking the Employment Contract: What Can Today's Corporate Reform Movement Learn from the Old Anti-slavery and Democratic Movements?

Ellerman argues that the same problems that infect the contractarian theory of slavery make current employment relationships non-voluntary, and argues that workers should take control of the enterprises they work for.  Click on the "continue reading" link below for the abstract.

ABSTRACT:

Liberal thought is based on the fundamental question of consent versus coercion. The autocracies and slavery systems of the past were based on coercion whereas today's democracy in the political sphere and employment system in the economy are based on consent. This paper retrieves an almost forgotten contractarian tradition, dating from at least the Middle Ages, that based political autocracy and economic slavery on explicit or implicit voluntary contracts. Hence the democratic and antislavery movements had to hammer out arguments not simply in favor of consent and against coercion, but arguments based on the distinction between contracts to alienate (translatio) sovereignty versus contracts to only delegate (concessio) self-governance rights. They argued that the alienation contracts were in a certain sense inherently invalid so that those basic rights were inalienable even with consent. These inalienable rights arguments from the democratic and antislavery movements are also retrieved, arguments that liberal thought neglects when the basic question is simplistically posed as consent versus coercion. Finally, it is noted that the basic inalienable rights argument—that a de facto person cannot fit the de jure role of a thing even with consent—applies equally well to the employment contract which can be seen collectively as a contract for the employees to alienate management rights over their work to the employer or individually as the contract to rent oneself to the employer for limited periods rather than to sell oneself as in the self-enslavement contract. In conclusion, the paper considers various paths to get from the employment relation in a firm to a democratic firm where the members are the people working in the firm.